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About 600 million Indians will receive a 16-digit identity number by 2014 in the first phase of the project, officials say. The entire project, which includes fingerprints and iris scans, is expected to be finished in eight years.

Officials expect the government will save $4 billion a year by preventing the theft of public funds.

"It has the potential to plug the hole in the leaking bucket that delivers government services and benefits to the poor," said Bibek Debroy, an economist at the Center for Policy Research in New Delhi. "The current identity databases are not clean and have many fake names and addresses and duplication."

Officials also say that existing databases -- for voting, welfare, income tax and passports -- are held by different departments and that there is little information-sharing or verification.

The biometric identity number will be entered every time someone accesses services from government departments, driver's license offices and hospitals, as well as insurance, credit card, telecom and banking companies.

The government also plans to use the database to monitor bank transactions, cellphone purchases, and the movements of individuals and groups suspected of fomenting terrorism. In January, the Ministry of Home Affairs began collecting biometric details of people in coastal villages to boost security because the gunmen in the 2008 Mumbai attacks, which killed 165 people, sneaked into the country from the sea.

Critics say the project will turn India into an Orwellian police state that will spy on citizens' private lives.

"We do not want an intrusive, surveillance state in India," said Usha Ramanathan, a lawyer who has written and lobbied against the project. "Information about people will be shared with intelligence agencies, banks and companies, and we will have no idea how our information is interpreted and used."

People testing the technology say implementing the project is difficult. India lacks a standardized structure for names and addresses -- Indian names can be a single word or even five words long, depending on the region, caste and religion. And in rural areas, addresses are not well defined and many poor workers, like farmers, have lost the ridges and grooves of their fingers after years of manual labor.

"We have large groups of people living deep inside forests with no electricity," said Ram Sewak Sharma, the project's chief executive. "It is a challenge to reach all these people for enrollment and store such a huge database."